On June 19, 2014, the Federal Energy Regulatory Commission (Commission) issued a notice of proposed rulemaking (NOPR) titled “Refinements to Policies and Procedures for Market-Based Rates for Wholesale Sales of Electric Energy, Capacity and Ancillary Services by Public Utilities.”  Recognizing that the current Order No. 697 market-based rate program imposes administrative burdens on applicants that may outweigh the benefits in certain circumstances, the NOPR proposes to make several changes to simplify the Commission’s market-based rate program for wholesale sales of electric energy, capacity and ancillary services.

The NOPR proposes several significant modifications to the current program’s horizontal and vertical market power analyses.  With respect to the program’s horizontal market power analysis, the NOPR proposes to eliminate the requirement for sellers to submit indicative screens in two situations:  (1) if the seller is in a regional transmission organization market and relies on Commission-approved monitoring and mitigation to prevent the exercise of market power, and (2) if all generation capacity owned or controlled by a seller in the relevant balancing authority areas is fully committed.  With respect to the program’s vertical market power analysis, the NOPR proposes to eliminate the requirement that sellers to file quarterly land acquisition reports and to provide information in their applications and triennial market power analyses on their control of sites for generation capacity development.

The NOPR also proposes to clarify the 100 MW reporting threshold for filing a change in status.  The proposed clarification is that the 100 MW reporting threshold is not limited to markets previously studied.  In other words, if a seller acquires generation since its most recent triennial update that would cause a cumulative net increase of 100 MW or more in any relevant geographic market (including generation in both the relevant geographic market itself and any first-tier/interconnected market with the potential to import into the relevant geographic market), the seller must make a change in status filing.  In addition, the Commission proposes to require sellers to report all long-term firm purchases of capacity and/or energy in their indicative screens, regardless of whether the seller has acquired control over the generation capacity supplying the power. Such purchases would be included in determining whether the 100 MW reporting threshold was met.

Comments on the NOPR are due 60 days after publication in the Federal Register.  As of June 20, 2014, the NOPR had not yet been published.